Near zero marginal cost societies

Jeremy Rifkin's book The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism has a strong connection to open organization principles, particularly community building. While it was first published in 2014, the book correctly described a future (our present) of green energy generation and energy use in logistics. In my previous article, I examined How open organizations align with collaborative commons. In this article, I look at its impact on energy production and supply.

Rifkin predicted most of our energy for home heating, running appliances, powering businesses, driving vehicles, and operating the whole economy will soon be nearly free with on-site power solar, wind and geothermal energy generation. This is starting already, through both individual and micropower plants. The payback time is very short, around two to eight years.

What would be the best organizational structure to manage nearly free green energy? It would be an organization that, through an intelligent communication and energy system, generates projects anywhere in the world, and shares energy across a continental energy internet. On top of that, these companies produce and sell goods at a fraction what is now charged by the current global manufacturing giants.

The Internet of Things changes everything

According to Rifkin, the Internet of Things (IoT) will connect every machine, business, residence, and vehicle in an intelligent network that consists of not just a communications internet like now, but in the future an energy internet, and a logistics internet. They will all be embedded in a single operating system. Energy use will be completely monitored. Rifkin predicted that we will transition to smart energy meters, which is true today. All this investment will reduce at least 10% of the waste in the current industrial system.

All this will be possible with the reduction of costs of sensors and actuators embedded in devices. Radio-frequency identification (RFID) chip prices have fallen, as have micro-electromechanical systems (MEMS) such as gyroscopes, accelerometers, and pressure sensors.

This will increase device connections, to as many as a thousand connections on one person's devices, appliances, and facilities. This connection is what young people love, total inclusion in a global virtual public square to share everything. They thrive on transparency, collaboration, and inclusivity with care taken to an appropriate level of privacy. So, you can see, the time is right for the growth of a Collaborative Commons in society.

Exponential curve

Exponential growth is deceptively fast. Consider the question: would you take $1,000,000 today or $1 that doubled every day for a month? (In 30 days, $1 grows to over $536,000,000!)

That is how fast costs are coming down, according to Rifkin. This will turn the entire fossil fuel industry investments into stranded assets. We should be planning for the Collaborative Commons using all open organization principles now, as the situation will be ideal for them very soon.

Moving to free energy

The next step is free energy (solar, wind, geothermal, biomass, hydro). After initial investments (research, development, deployment), Rifkin suggested that unit costs will rapidly come down, and they have. The information internet and near zero-cost renewables continue to merge into the energy internet, powering homes, offices, and factories. Ideally, there will be energy that's loaded into buildings and partially stored in the form of hydrogen, distributed over a green-electricity internet, and connected to plug-in, zero-emission transportation. We aren't quite there yet, but the development of renewable energy establishes a mechanism that will allow billions of people to share energy at near zero marginal cost in the IoT world. Two examples are solar and wind:

1. Solar power

Solar power is very efficient, and facilities only need to obtain less than 1% of the sun's energy that reaches the Earth. That would provide six times the energy we now use globally.

SunPower Corporation is one company doing that. It supports making homes energy producers. The price of solar photovoltaic (PV) cells tends to drop by 20% for every doubling of industry capacity. Solar panels are increasing, and their ability to capture more energy per panel is increasing. Expect to see the development of thinner solar panels, and paper thin solar sheets. Eventually there will be solar energy paint and solar energy windows in the future.

When too much energy is generated, it must be sold elsewhere or stored in batteries or used to produce hydrogen. This technology is coming to the market and will dominate it very soon. With these technologies alone, electricity is on the way to have zero marginal cost.

2. Wind power

Wind power has been growing exponentially since the 1990s, and is now nearing fossil fuel and nuclear power generation levels (as of 2015). With the lowering costs of windmill production, installation, and maintenance, wind power is doubling every few years. With the increase of solar and wind energy sources, governments do not need to subsidize them with tariffs any longer.

Energy Watch Group is tracking this. Rifkin predicted geothermal energy, biomass, and wave and tidal power will likely reach their own exponential takeoff stage within the next decade. He wrote that all this will happen in the first half of the 21st century, and we are already seeing that effect in 2025. If this capacity continues to grow, 80% of all energy generation will be from these renewables within five years.

The collaboration age

With all the above developments, society's working and living environments are changing. According to Moving From The Information Age To The Collaboration Age (Forbes, 2020): "This means ensuring that people can collaborate on tasks without friction. That humans and machines work seamlessly together. And automation—machine to machine collaboration—will be crucial. Those businesses that get these elements right will be able to boost employee satisfaction and attract the best talent. They will reduce costs by automating mundane tasks and by requiring a smaller office footprint."

It sounds good, but how do businesses transition from the information age to the collaboration age? One area will be in decentralized production, through 3D printing technology, using additive manufacturing technology, not the current cutting away manufacturing methods that create material waste.

Instead of shipping goods, industry will push software to enable products to be manufactured locally, avoiding shipping costs and bringing manufacturing on-site near where the market needs it. Locally, newly developed molten plastics, molten metal, or other feedstock inside a printer will be used for fabrication. This will give one 3D printer the ability to produce tens of thousands of products. In recent years, we have seen several examples of this, like jewelry, airplane parts, and human prostheses.

Centralized manufacturing vs local production

Rifkin believes lower marketing costs are possible by using the IoT economy and using global internet marketing sites at almost zero marginal cost.

1. There is little human involvement in the local 3D process (giving the name "infofacture"), different from traditional manufacturing. They ship the information required for local manufacturing, like downloading music today. It is just code that you receive.
2. The code for 3D printing is open source, so people can learn and improve designs, becoming further prosumers in a wide range of items (no intellectual-property protection barriers). This will lead to exponential growth over the next several decades, offering more complicated products at lower prices and near zero marginal cost.
3. There is great waste with subtraction processes (current manufacturing processes) producing great waste with each process, losing about a tenth of the materials required. In the future, this material could be developed from subatomic particles that are available anywhere in the local environment, like recycled glass, fabrics, ceramics, and stainless steel. Composite-fiber concrete could be extruded form-free and be strong enough for building construction walls, probably available in two decades.
4. 3D printing processes have fewer moving parts and less spare parts. Therefore, expensive retooling and changeover delays will be less extensive.
5. Materials will be more durable, recyclable, and less polluting.
6. Local distributed production, through IoT, will spread globally at an exponential rate with little shipping cost and less use of energy.

Rifkin cited Etsy as an example of this model. You can find things you are interested in, and have them produced locally using their network. They sell the code, and you can have it supplied in your area.

Rifkin predicted that in the future, with small and medium sized 3D businesses, infofacturing more sophisticated products will likely cluster in local technology parks to establish an optimum lateral scale (another form of community development). Here are a few current examples:

• RepRap: This is a manufacturing machine that can produce itself and all its parts.
• Thingiverse: The largest 3D printing community. They share under the General Public Licenses (GPL) and Creative Commons Licenses.
• Fab Lab: Open source peer-to-peer learning in manufacturing. It is being provided to isolated and distant communities in developing countries.

The future of work and collaborative commons

When technology replaces workers, capital investments replace labor investments. In 2007, companies used 6 times more computers and software than 20 years before, doubling the amount of capital used per hour of employee work. The robot workforce is on the rise. China, India, Mexico, and other emerging nations are learning that the cheapest workers in the world are not as cheap, efficient, or productive as the information technology, robotics, and artificial intelligence that replaces them.

Going back to Rifkin's historical descriptions, the first industrial revolution ended slave and serf labor. The second industrial revolution will dramatically shrink agricultural and craft labor. Rifkin believes the third industrial revolution will be a decline in mass wage labor in manufacturing jobs, service industry jobs, and salaried professional jobs in large parts of the knowledge sector.

Rifkin suggested that a supply abundance over demand and a zero marginal cost economy, will change our notion of economic processes. Also, the old paradigm of owners and workers, sellers and consumers will break down. In this model, consumers will start producing for themselves (and a few others), eliminating their distinction. Prosumers will increasingly be able to produce, consume, and share their own goods and services with one another on the Collaborative Commons at diminishing marginal costs approaching zero, bringing to the fore new ways of organizing economic life beyond the traditional capitalist market mode.

Rifkin forecasted that in the future, greater importance will be placed on the Collaborative Commons and be as important as hard work was in the market economy (one's ability to cooperate and collaborate as opposed to just working hard). The amassing of social capital will become as valued as the accumulation of market capital. Attachment to community and the search for transcendence and meaning comes to define the measure of one's material wealth. All the open organization principles we write about will be exponentially more important in the future.

The IoT will free human beings from the capitalist market economy to pursue nonmaterial shared interests on the Collaborative Commons. Many (but not all) of our basic material needs will be met for nearly free in a near zero marginal cost society. It will be abundance over scarcity.

Rifkin writes that as capitalist economies step aside in some global commodities, in the Collaborative Commons, sellers and buyers will give way to prosumers, property rights will make room for open source sharing, ownership will be less important than access, markets will be superseded by networks, and the marginal cost of supplying information, generating energy, manufacturing products, and teaching students will become nearly zero.

Internet of energy is on the way

Financing of the IoT will not come from wealthy capitalists and corporate shareholders, but from hundreds of millions of consumers and taxpayers. No one owns the internet. It is only in operation because a set of agreed-upon protocols were established that allows computer networks to communicate with each other. It is a virtual public square for all who pay for a connection to use it. Next comes distributed renewable energies that will be distributed in the same way. Supported by feed-in tariffs and other fund-raising methods, governments will pay for the initial research, but after that fixed investment, the public will be able to connect and use it freely. Once underway, governmental centralized operations will move to distributed ownership. The Electric Power Research Institute (EPRI), is studying how to build a national energy internet over the next 20 years.

This is not just supplying electricity. Every device in every building will be equipped with sensors and software that connect to the IoT, feeding real-time information on electricity use to both the on-site prosumer and the rest of the network. The entire network will know how much electricity is being used by every appliance at any moment — thermostats, washing machines, dishwashers, televisions, hair dryers, toasters, ovens, and refrigerators.

This is not happening in the future, but now. It is not just being considered but being done now. Intwine Energy can supply the above process now. The issue is getting it into the greater global population. A group of young social entrepreneurs are now using social media to mobilize their peers to create, operate and use the energy internet.

A new world of abundance beyond our needs

Rifkin thinks society has to start envisioning an entirely different living environment. Imagine a world in which you can just give away things you once had to pay for, or had to sell at a profit. He believes these give-away goods need not be covered by governments, like telecommunication, roads, bridges, public schools or hospitals. They need not be considered totally private property to be sold and bought, either. These goods have to be supplied in communities with rules, responsibilities and joint benefits (information, energy, local production, and online education). Not governed by the markets or governments, but by networked commons because of the tragedy of the commons. It governs and enforces distributed, peer-to-peer, laterally scaled economic activities.

Rifkin feels the Collaborative Commons as a governing body is extremely important. This is where local (project) leadership comes in. The goals, processes, tasks and responsibilities must be successfully executed, after they have been decided and agreed on. Furthermore, "social capital" is a major factor. It must be widely introduced and deepened in quality. Community exchange, interaction and contribution is far more important than selling to distant capital markets. If that is the case, our open organization leadership will be extremely important.

The public square vs private ownership

"The public square, at least before the Internet, is where we communicate, socialize, revel in each other's company, establish communal bonds, and create social capital and trust. These are all indispensable elements for a nurturing community." Historically, Japanese villages were built like that to survive natural disasters like earthquakes and typhoons, not to mention economic or political collapses. They put common interests over self-interests. This is what the open organization principle of community is all about.

The right to be included, the right to interact with one another and the right to participate together, are fundamental rights of all. Private property, the right to enclose, own, and exclude is merely a qualified deviation from the norm. For some reason, having massive private property rights have gained in importance in more recent modern times. This will all be reversed in the years ahead according to Rifkin.

Rifkin writes that the world will move to these commons:

1. Public square commons
2. Land commons
3. Virtual commons
4. Knowledge commons (languages, cultures, human knowledge and wisdom)
5. Energy Commons
6. Electromagnetic spectrum commons
7. Ocean commons
8. Fresh water commons
9. Atmosphere commons
10. Biosphere commons

The past 200 years of capitalism, the enclosed, privatized, and commodification of the market must be put under review. How could they become more effective in a transparent, non-hierarchical and collaborative culture? It comes down to two views: the capitalist ("I own it, it's mine, and you can't use it") and the collaborationist ("This is for everyone to use, and there are rules and guidelines to use it, so everyone can get their fair share"). Today's cooperatives are good at this, like the International Co-operative Alliance (ICA). Cooperatives have to generate motivation for the greater community good, and that motivation must be greater than any profit motive. That is their challenge but this is not new, as one in seven people on the earth are in some kind of cooperative now.

As I've presented in this article, the IoT will become our working and living environment. Also, energy costs are projected to go to near zero. With those changes, community collaboration and cooperation will become ever more important over hard work. In the last part of this series I will look at Collaborative Commons in logistics and other economic activity.

This article is adapted from Near zero marginal cost societies and the impact on why we work by Ron McFarland, and is republished with the author's permission.